Report shows housing in Victoria less affordable last year
By Andrew Patrick
Victoria became a less affordable place to live last year as the price of housing continued to climb faster than household incomes, according to a Vancity report comparing housing affordability across 30 municipalities in Metro Vancouver and the capital region.
Affordability in Victoria dropped more than eight per cent overall for the year ending in February.
The report compared the proportion of household income needed to buy a home in each jurisdiction. A municipality was deemed unaffordable if the proportion of income needed to pay for a mortgage – also known as the gross debt service ratio (GDS) – was higher than 32 per cent.
Victoria avoided that classification as its GDS came in at 25.7 per cent, making it the third most affordable municipality studied, next to Sooke and Langley. Oak Bay and North Saanich ranked among the ten least affordable places to live.
Despite Victoria’s high ranking, the broader outlook for the city was mixed, according to Ryan McKinley, senior mortgage development manager at Vancity.
“The good news is that by and large, Victoria and the surrounding area have many of the pockets of affordability of the municipalities that we studied,” he said. “The potentially concerning news is that although these properties are still affordable, according to the median income that we looked at, affordability is declining.”
The state of housing affordability in the city has city councillor Ben Isitt concerned.
“We’re in the midst of an acute housing affordability crisis, so I think action is needed by all levels of government to address this problem,” he said.
“What I’m hearing from many people is that home ownership is completely off the table and affordable rental options are disappearing as well. So I think we’re seeing a decline in affordability, both of home ownership as well as rental housing.”
The Vancity report showed the rate of decline in affordability varied significantly by type of housing. The price of a detached home in Victoria reached $725,000 last year, an increase of 25 per cent from the previous year. That meant a further 24 per cent decrease in affordability for that class of property, as the GDS for detached homes reached 43 per cent. Apartment prices, by contrast, increased eight per cent to reach $330,000, requiring 20 per cent of household income for a mortgage.
Many new buyers have come to the capital region in search of relief from an overheated market in Vancouver, noted Kyle Kerr, president-elect of the Victoria Real Estate Board (VREB), and residents in James Bay may feel the pinch more than other areas of the city.
“There is no more land in James Bay; it is fully densified,” Kerr said. “We can build some apartments here or there, but there are no more single-family homes that can be added on. Yet lots of people coming here from Vancouver or Alberta want to live in those prime areas.”
The result is high demand, low supply, and higher prices compared with other areas of Victoria. The price for a single-family home in James Bay was 23 per cent higher than the rest of the city, reaching $984,700 this May, according to VREB sales data. That represents a 50 per cent increase from three years ago.
The situation presents additional challenges for renters, as many would-be homebuyers choose to stay in the rental market, which adds pressure on both the price of rental units and the city’s vacancy rate, currently sitting at 0.5 per cent, according to Canada Mortgage and Housing Corporation.
Councillor Isitt would like to see the city begin to purchase land to build and manage new affordable housing stock.
“Top on my list would be a massive public housing program with the city serving in the role of developer for the next 10 to 20 years to create a substantial expansion of the non-market housing supply,” he said.
“The private sector is not producing affordable housing and other levels of government aren’t creating affordable housing on the scale that’s needed to address the crisis,” he added.
Isitt said the city currently has a committee working on policy details for a potential public housing program and is expected to present its findings to the public later this fall.
He said he would also like city council to place a moratorium on the demolition of existing rental buildings. The proposal would require new developments to replace existing units with an equivalent number of new units at the same rental price. The moratorium would kick in when the vacancy rate drops below four per cent, and would remain in place until the city completes a rental housing retention strategy and a new rental housing maintenance bylaw.
The proposal would also see the city explore additional protections for tenants facing displacement, and initiate an incentive program for property owners to refurbish and retain rental buildings.
Isitt and councillors Pam Madoff and Jeremy Loveday put the moratorium forward as a motion to council to be considered June 22, after the time of publication.